The federal government doubled down on Small Business Administration (SBA) lending as a key economic recovery tool and enacted several enhancements to the SBA 504 program following the pandemic.
The SBA 504 Refinance Program was enhanced to make it accessible to more business owners. Now, the 504 Express Program will help borrowers get approvals sooner, close quicker and lock in long-term fixed rates for 504 loans.
SBA 504 Express Loan Program
In the Economic Aid Act, Congress grants the SBA the authority to establish a 504 Express Loan Program. Pending SBA rules, Certified Development Companies (CDC) participating in the program, such as TMC Financing, may expedite the approval, authorization, and closing of certain loans less than $500,000.
For example, it can cover projects up to:
- $1,210,000 with 90% financing
- $1,382,000 with 85% financing
- $1,610,000 with 80% financing
As the popularity of the 504 program continues to grow, the 504 Express will be a great option for smaller projects to access capital faster.
The 504 Express is slated to expire on September 30, 2023, but it is possible that it becomes permanent instead.
SBA 504 Refinance (Updated July 2021)
The SBA 504 Refinance Program allows small-to-medium sized businesses to restructure existing debt on their commercial real estate. Borrowers can leverage the equity trapped in real estate and take cash out for eligible business expenses. The cash-out option allows for up to 20% of the appraised value of the property.
On July 29, 2021 the SBA published Interim Final Rule 021-15975, outlining enhancements to the SBA 504 Refinance Program. Highlights of the enhancements include:
- Existing government-guaranteed debt (such as 7a and 504 loans) can be refinanced
- Qualified Debt must be at least 6 months old – down from 2 years
- Elimination of the requirement that the loan must have been current on payments for 1 year prior to the application date
- Reinstatement of Alternate Job Retention Goal – all existing jobs may be counted as jobs retained (full-time and full-time equivalent jobs allowed)
For a more in-depth look at the refinance program, download TMC Financing’s Refinance Guide.